When companies work together to create something innovative, an RFP is never involved. RFPs are issued for commodities and mature processes that have been around a long time. On rare occasion, a completely new, perhaps disruptive, process is created and the customer sends out an RFP for execution of parts of the process. In each of these cases, the supplier is told exactly what to do and how to bid. The customer is asking how much will it cost me for you to fit into this box?
For most services and a lot of goods, RFPs are harmful to both the customer and the supplier:
- The customer, who knows less about the service/product category, is dictating solution parameters to the suppliers, who know more about the category
- To create an RFP, a scope of work or product spec has to first exist. When the RFP is issued, the SOW/spec is either old, hastily crafted by the customer themselves or crafted well by a consultant at a high price.
- Suppliers each have unique product and delivery attributes but hide or spin them to match what they think the customer is looking for.
It seems weird that customers issue so many RFPs if they are unhealthy for everyone involved. But it is not the customers’ fault that RFPs are used so much – it’s the suppliers’ fault. In supplier organizations, the most common method of selling is to sit around and wait for an RFP to come in and then answer it. If consultative, disruptive salespeople are not working actively to develop meaningful customer relationships and create substitutes for current processes, then the customer has little choice but to buy the same service as last time and get the best price possible for it. Customer organizations can only spend so much time seeking out valuable, strategic supplier relationships proactively, especially if the category is not in their direct supply chain. They won’t even know how to begin in many cases – how could they if they are not in your business?
If you are hunting for new business, take the word hunt seriously. Waiting for RFPs to come is not hunting, it’s picking up the dead birds your cat leaves on your porch. Your goal in hunting is to work with your customers to develop substitutes for their current process(es) that are ultra-valuable and so unique they literally cannot be sent out to RFP. And if you are fortunate enough to have won an RFP, make sure your next goal is to design a substitute for your own service, giving your customer value and saving yourself from having to bid on your own business. When you are un-RFP-able, everyone wins.
Enter your email address at the top right of the page to have all megadisrupter articles delivered to your inbox!